Inco plans to invest $1 billion to build two nickel plants

Inco plans to invest $1 billion to build two nickel plants

Ika Krismantari, Jakarta Post

15th March 2007

PT International Nickel Indonesia (Inco), the country's biggest nickel miner, said Wednesday it would build two new nickel plants by 2010 at a total cost of US$1 billion.

President director Arif S. Siregar said the two plants would be built at the company's mines in Bahodopi, Central Sulawesi, and Pomalaa, Southeast Sulawesi.

However, the company would first prioritize the construction of the Bahodopi plant, Arif said. As for the Pomalaa plant, PT Aneka Tambang has already built two ferronickel smelters to which Inco must supply about one million pounds of ore per year.

"We are still conducting the feasibility studies on the two plants," Arif said, while declining to give details on their production capacities.

Inco also plans to build a third hydroelectric power plant in Karebbe, South Sulawesi, so as to boost its annual production capacity to 200 million pounds of nickel in matte by 2010 from 157.9 million pounds in 2006.

The power plant, which will be built on the Larona river at a cost of between $275 million and $280 million is expected to increase existing power-generating capacity by 33 percent to 90 megawatts (MW) annually.

Currently, Inco operates the 165-MW Larona and the 110-MW Balambano hydro plants to power its nickel plant in Soroako, South Sulawesi.

This year, Inco hopes to produce between 155 and 165 million pounds of nickel in matte. In its latest unaudited report, Inco booked a 154.8 percent increase in 2006 fourth quarter sales to $589.6 million from $231.4 million in the same period of the previous year. Its net profit jumped significantly by 368.3 percent to $265.5 million in the fourth quarter of 2006, or $0.27 U.S. cents per share, from $56.7 million, or 0.06 U.S. cents per share, in the same quarter of 2005.

Over the entire year, Inco's sales increased by 51.1 percent to $1.33 billion from $885.1 million in 2005, making its net profit soar by 97.1 percent to $513.4 million, or 0.52 U.S. cents per share, from 2005's net profit of $267.8 million, or 0.27 U.S. cents per share.